SYRACUSE, N.Y.—Anti-drone activist Mary Anne Grady Flores, a 59-year-old caterer, was arrested in 2013 for stepping onto the property of Hancock Field Air National Guard Base near Syracuse. Ms. Grady Flores, who had a court order to stay away from the base’s colonel, began a six-month jail sentence in January.

“She was taking photographs, and she thought she was on the legal side of the road,” said her sister, Ellen Grady.

The efforts of upstate officials and businesses to develop an economy around the drone industry come amid a broader public debate about unmanned aircraft.

One group, called Upstate Coalition to Ground the Drones and End the Wars, of which Ms. Grady Flores is a member, is focused on military drones. It demonstrates twice a month at Hancock, which flies MQ-9 Reapers for the U.S. military. Opponents of military drones cite a range of objections, including that the machines inappropriately remove the human element from the intentional violence of warfare.

Both military and commercial drones raise issues of civil liberties and surveillance, some activists say. “It almost feels like they provide a cover for the real nitty-gritty,” said longtime activist Ed Kinane. “I think on a certain level the powers that be are aware of playing that card.”

Others in the region defend the development of the drones, saying the machines could play a critical role in the economy of the future. Among them: those involved in a Syracuse University student organization known as Skyworks Project.

“When we started people were really afraid of drones, and my goal was to let people get their hands on them and re-evaluate their judgment of it,” said founder Arland Whitfield, 22, who now works for a drone company.

After a public-safety officer told a club member drones were banned on campus, students brainstormed ideas for negotiating with the university.

A university spokeswoman said the school hadn’t banned the use of drones on campus and had no official drone policy.

The question of privacy came to the local legislators on the Syracuse Common Council, which passed a resolution in December 2013 banning the purchase and use of drones by the city and its agencies.

Drones raise “far-reaching issues concerning the extent of government surveillance, the value of privacy in the digital age, and the role of Congress in reconciling these issues,” the resolution read.

Ms. Grady Flores, meanwhile, was released from jail earlier this month pending the outcome of her appeal.